CAC40: sinking despite record S&P/DJones double, rate -5Pts

(CercleFinance.com) - The contrast in performance was confirmed on Friday, with Europe sinking into dreariness (-1% for the E-Stoxx50 at 4,800) and a flamboyant Wall Street ending the week with a new string of all-time records for the Dow Jones (+0.
3%) 43.895Pts (44,000Pts seem so close), followed by the S&P500 (+0.3% to 4,991 and aiming for 6,000Pts by 10 p.m. to make its mark before the weekend).

The Nasdaq (+0.1% to 19,300) is currently just 0.01% away from its zenith of 18,301.7 the previous day (with an average P/E of 46.85, which explodes the limits of the known' and above all the 38.6 of the dot.com' bubble or the 34.2 of late October 2007.

The Paris stock market lost nearly -1.2% around 7340Pts, penalized by the downturn in the luxury goods sector, with Kering down 7%, Hermès down 4% and LVMH down 2.5%.
Over the past week, the CAC40 was also down -1%, and -2.7% since January 1st, compared with +28% for the Nasdaq, i.e. a record gap of 30%!

As expected, last night the Fed cut its main key interest rate by a quarter point, its second cut in less than two months, while refraining from providing too many clues as to its intentions for the coming months.

However, its members decided unanimously to cut the main key rate, citing tame inflation tending towards 2% and the need to prevent the risks of a slowdown in growth, even if it is admittedly "progressing at a sustained pace".

Michael Brown, strategist at Pepperstone, commented: "My basic scenario remains that the committee will continue to cut rates by 25 basis points at the end of the next few meetings, until a neutral rate of around 3% is reached next summer".

From the analysts' point of view, Wall Street's favorable momentum should continue, particularly with the prospect of more advantageous taxation for US companies.

In our view, Trump's second term will be marked by lower corporate taxes, deregulation of the technology sector, the introduction of tariffs designed to stimulate the US industrial sector and relocation, and policies to support crypto-currencies', points out Yan Taw Boon, manager at Neuberger Berman.

With Donald Trump signaling his intention to impose lighter, more flexible regulations for the sector, Bitcoin set a new record above $76,000 last night, and some already see it reaching the $100,000 mark in the near future.

The fact that the S&P 500, the benchmark index for US managers, is within reach of the historic 6.000 points should also encourage investors to consider a new short-term bullish push (despite +45% with no real correction in 12 months and one week).

On the other hand, the day promises to be rather quiet in terms of indicators: Michigan's consumer confidence index improved much more markedly than expected in November, according to the preliminary results of the monthly survey published by the University of Michigan on Friday.

Its confidence index rose for the fourth month in a row to 73 this month, compared with 70.5 in October, while economists were expecting it to stand at just 71.

The report, finalized on Monday on the eve of the presidential election, shows that the sub-index measuring consumer expectations jumped to 78.5, compared with 74.1 the previous month, reaching its highest level since July 2021.

With the employment situation still solid across the Atlantic, inflation tending to moderate and stock market indices at record levels, US household sentiment should logically remain buoyant.
On the bond front, US 10-year T-Bonds eased 5pts to 4.292%, while German Bunds of the same maturity shed 6.3pts to 2.3700%, and our OATs dropped 7pts to 3.1330%.
In London, Brent crude oil fell back -2% to $74.1 a barrel, while the euro shed 0.5% against the greenback, to $1.075/E, spot -0.6% hebdo.


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